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Rupee recovers 11 paise, Rs 42.76 to $; Credit Policy feared to affect forward premia

The rupee staged a smart recovery, appreciating by 11 paise against the greenback at the interbank foreign exchange market on improved political situation at the Centre today.

The rupee opened slightly higher at Rs 42.83/86, which was also the day's low, showed a mild rally during the course of the day restricting the activity in a one-way trading. The Indian unit finally ended at Rs 42.75/76 against the previous close of Rs 42.86/88, gaining 11 paise.

Dealers said, the rupee continued its upward journey from the intra-day low of Monday on increasing hopes of formation of a new government soon. The decision regarding passage of Budget and the Finance Bill of 1999-2000 without debate had already brightened the market sentiments, they said.

Dealers, however, did not attributed rupee's gain to the Credit Policy measures announced by the RBI. It may bring cheer to the spot market, but by extending forward cover to the foreign institutional investors, the policy is likely to bring down the forward premia, they added.

Forward premia eased moderately on receiving and in the absence of paying pressure, near forwards ended lower by 3-4 paise while far forwards fell by 6-7 paise. The six-month annualised premium and yearly premia finished lower at 6.67 and 7.23 per cent respectively from 6.67 per cent and 7.42 per cent of the previous day.

Cash/spot and cash/tomorrow premium ended at 1.00 paise and 0.50 paise respectively. The month-wise premium in paise were: April 3.5-4.5, May 23-26, June 46-49, July 69-71, August 93-95, September 120-122, October 149-151, November 179-181, December 209-211, January 239-241, February 264-266 and March 291-293.

Meanwhile, the RBI revised the reference rate for US dollar by six paise lower at Rs 42.79 against Rs 42.85 of the previous day.

In the cross currency, rupee appreciated against pound sterling, Japanese yen and euro marginally. Sterling ended at Rs 69.06 (Rs 69.32), Japanese yen at Rs 36.24 (Rs 36.35) and euro at Rs 45.49 (Rs 45.58).

UNI

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